Asian Market Update – Monday: Asian Shares Rally as China Returns from Golden Week

China golden week

The Big Question: What kind of signals will the upcoming China Party congress offer for markets?

Asian stock markets rallied on Monday with nice gains seen in the Chinese Mainland and slight increases in South Korea and Australia after the Chinese market reopened after an eight-day National Day Holiday known as the Golden Week.

On the Chinese Mainland, the Shanghai Composite Index gained 1.24 percent to 3,390 around midday, while the closely watched CSI 300 index, which tracks shares of the 300 largest Chinese companies listed in Shanghai and Shenzhen, jumped 1.85 percent to 3,907.

Analysts attributed the big gains in the Monday morning session to mainland investors’ eagerness to trade following a weeklong market closure last week, despite lower-than-expected service sector data in the country. The Caixin Services Purchasing Managers Index fell to a 21-month low in September to 50.6, down from 52.7 in August. A reading above 50 indicates an expansion in the service sector.

Also, trade was boosted by a decision last week from the People’s Bank of China to cut the reserve ratio requirement (RRR), cash banks are required to hold as reserves, to boost liquidity.

In Hong Kong, the Hang Seng Index was down 0.38 percent to 28,365 at midday. The Hang Seng Index rallied during the Chinese golden week, as mainland traders flocked to Hong Kong, where markets were open, to trade.

Down Under, the ASX 200 also gained 0.67 percent to 5,748 at midday on Monday.

Japanese and South Korean markets were closed on Monday for local holidays.

Talk of the Day: What will Chinese policymakers signal during the 19th National Congress of the Communist Party of China scheduled for next week? Also, how connected are the markets between the Chinese Mainland and Hong Kong following the establishment of the Shanghai-Hong Kong Stock Connect. Will valuations converge or remain independent of each other as they become more linked?

Also in the news: Fresh signs of rising tensions on the Korean Peninsula emerged after US President Donald Trump tweeted that “only one thing works” in solving the North Korea nuclear issue.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
China-Shanghai Composite Index 3,390.51 1.24%
China- CSI 300 3,907.53 1.85%
Hong Kong –Hang Seng 28,365.08 -0.38%
Australia-ASX 200 5,748.80 0.67%

Cryptocurrencies

Prices of cryptocurrencies saw mixed performance overnight during the Asian trading session on Monday, as the price of bitcoin continued to rally and prices of ethereum and litecoin fell.

At midday in Asia, the bitcoin price was up 0.54 percent to $4,622. Bitcoin price has jumped significantly from about $4,334 on Saturday to surpass the $4,600 mark earlier Monday morning in the Asian trading session.

In a rare moment, the price of ethereum broke with a largely convergent movement with bitcoin on Monday morning, as the it dropped 2.15 percent to $302 at midday in Asia.

Litecoin also saw some losses during the Monday morning session in Asia, as the virtual currency’s price dropped 1.15 percent to $52.42.

Currencies

The Japanese yen gained 0.02 percent against the US dollar at midday Friday to 112.58 per dollar.

The Chinese yuan gained 0.3 percent against the US dollar to 6.6335.

The Australian dollar lost 0.15 percent on the dollar, changing hands at 1.2870 per dollar at midday.

Commodities

WTI Oil was up 0.53 percent to $49.43 per barrel.

Brent Crude gained 0.40 percent to $55.72 per barrel.

Gold was up 0.55 percent to $1,282.89 an ounce.

Business News across Asia

In China, the Chinese government on Monday issued new policy that aims to boost the country’s pharmaceutical industry. The policy said that the Chinese government will accept foreign companies test results and speed up registration process for foreign drugs to enter the Chinese market.

Take away: This is a significant move from China where the drug market is largely off limits to foreign drug-makers. Expect shares of global drug-makers to rise as the news make the round.

Featured image from Zimbio.com

Author:
Fredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.